China's luxury car market takes a hit

30 April 2013

BEIJING: New government regulations have banned the use of military licence plates on 11 luxury auto brands in China, forming part of a wider move to clamp down on the privileges of the country's elite.

The models affected include those made by Mercedes-Benz, BMW, Lincoln, Cadillac, Bentley, Jaguar, Porsche and Volkswagen, according to a Ministry of Defence statement.

In addition, the army is to launch a crackdown on the use of counterfeit military plates and people who abuse authentic plates.

But observers were sceptical about the long-term effect. "I am sure many expensive cars with military plates will re-emerge soon," Professor Chen Jierong of Sichuan University, told the South China Morning Post.

"They have been banned five times over the last few decades, but more emerged after each ban," he added. "This time will be the same."

He also remarked on the practice of leasing out military-owned vehicles, with official plates, to civilians for non-military use.

"It is a common practice in Beijing for an Audi A8, with a real [military] plate, real paperwork and a real driver in a military uniform, to be leased out by a senior military officer to a businessman," he said.

"The businessman pays 800,000 yuan a year but gets many benefits in return, such as giving others the impression that he has strong ties to the military."

Chen added that ordinary people were angry about the privileges granted to military vehicles, including running red lights, driving in emergency lanes and not paying road tolls.

Like Chen, Renee Hartmann, co-founder of consultancy, China Luxury Advisors, noted that the current anti-corruption campaign was simply the latest manifestation of a long-running effort to tackle "formalism, bureaucracy and hedonism" in the upper ranks of the bureaucracy.

She said, however, that "China's elite government and private-sector leaders seem to be treating this crackdown like any other obstacle in China – they find ways to circumvent the danger while guarding their public images".